Medicare Switches Gears: Will Pay for Amgen's Pricey Leukemia Drug

Experts say FDA blinked on Blincyto stand-off

WASHINGTON -- The Centers for Medicare and Medicaid Services appears to be backpedaling on their previous criticism of a very expensive new cancer drug. Despite initial resistance, Medicare will reimburse payments for Amgen's blinatumomab (Blincyto) beginning October 1, reported The New York Times on Saturday.

Health policy experts say the decision reveals how powerless the government is to deny payment for high-priced drugs, particularly when the treatments have FDA approval.

"I think that this was the right move, because this is a product that meets all of the criteria," said Dan Mendelson, MPP, CEO of Avalere Health, referring to the requirements of the new technology add-on payments program. The program defines the "newness" of a treatment based on a lack of "substantially similar" alternatives.

Blincyto, dubbed a "serial killer of tumor cells," is a bi-specific T- cell engager (BiTe) for patients with an aggressive form of blood cancer known as Philadelphia chromosome-negative relapsed or refractory B-cell precursor acute lymphoblastic leukemia.

Bi-specific T-cell engagers or BiTes latch onto molecules on the outside of cancerous cells while also attaching themselves to normal T-cells, bringing the two enemy cells together and enabling the T-cells to inject toxins into the cancerous cells, killing them, according to the Federal Register.

The treatment, which was approved by the FDA on Dec. 3, 2014, and brought to market two weeks later, is delivered through an IV infusion. One treatment cycle lasts 28 days and is followed by two weeks without treatment. Each 28-day cycle costs approximately $178,000 per treatment course, according to the Times.

The NTAP program was developed in the early 2000s as new high-priced technologies such as drug eluting stents came to market and hospitals struggled to pay for them, Mendelson explained to MedPage Today.

So, Congress established a new program to prevent hospitals from balking at using life-saving technologies by allowing Medicare to reimburse them and "make them whole," he said. In this system, hospitals should neither gain or lose money, he said.

In 2010, CMS established a final rule for determining "newness" based on whether a product under consideration was "substantially similar" to an already available product. The factors used for the basis of the decision included:

whether the product used a similar mechanism of action as an existing drug or technology

whether the product belonged to the same diagnosis related group (DRG)

whether the new use of the product involved a similar disease type or patient group

If the product showed similarities across these three factors then the drug was not defined as "new" and would not be eligible for payments.

Amgen, the sponsor company, urged CMS to reimburse Blincyto as an anti-cancer treatment that has demonstrated efficacy in patients for whom chemotherapy has failed or for patients who are no longer eligible for chemotherapy due to its side effects.

In the proposed rule, the agency initially argued that the specific population the sponsor had identified as benefiting from the drug "may not be sufficiently distinguishable from the overall patient population that may be eligible for treatment." The agency said the drug did not meet the "newness" criterion because it "may be similar to other approved technologies currently available to treat the same population and medical disorders."

Then, in response to additional information from the sponsor, the agency stated, "[W]e agree with the applicant that the BLINCYTO technology is not substantially similar to the other technologies currently available that are also used in the treatment of patients diagnosed with the same or similar types of conditions." The agency further elaborated that the product used a different mechanism of action than other similar product, would be categorized in different MS-DRGs than these similar products, and would be prescribed to a different patient population than the available products.

Mendelson said CMS is generally "stringent" in granting new technology add-on payments. In this case, he noted, "they made one decision and thought twice and then changed their decision."

Mark Pauly, PhD, a health economist at the Wharton School, University of Pennsylvania in Philadelphia, saw things differently.

"Well, they caved," he said.

Fortunately, this type of leukemia is relatively rare, he said. "So the total cost is not going to be enough to blow out anybody's budget like some of the other drugs." For example the hepatitis C drugs, which have a much broader patient population, he added.

If someone is looking to play the blame game, both the drug companies and the government are responsible. "Drug companies are behaving like monopolists but of course the government assures their monopoly."

"The government is no tougher a negotiator than anybody else" he said, particularly when the drug shows "dramatic results" and has scant competition.

The message to drug companies is simple: keep pursuing treatments for relatively rare conditions and charging high prices.

For now, America can afford it, Pauly said. "All of these drugs are worth more than what they're charging for them, at least to the people who are getting them."

David Howard, PhD, a professor at Emory University School of Public Health in Atlanta, Georgia, wondered whether a possible legal threat from Amgen or patient advocates had influenced CMS's decision, in light of the drug having FDA approval.

"The law does state that CMS has to cover all medically necessary treatments," he said.

Howard said this was the first time he could recall CMS wavering on a reimbursement decision like this one and that there are a few different ways to interpret its behavior.

On one hand, he said, "A drug that comes to market at a very high price without good evidence that it benefits patients is going to be subject to extra scrutiny, more so now than it was in the past."

"On the other hand, they did cave. So I'm not sure what a company takes away from this."

Looking Forward

Mendelson said the new technology add-on policy is particularly important now as more bundling and capitation rules are introduced because it removes disincentives for providers who might not otherwise use certain treatments.

Whether it's a biopharmaceutical or a new surgical intervention, he said, "you don't' set up a world where doctors are being incented to withhold care."

That said, CMS needs to be thoughtful in applying its criteria. "You want to be sure that you're being appropriate about mitigating perverse incentives, not opening up the floodgate to unbridled Medicare spending," he said.

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